Gary Weiss, Journalist and Author: Overstock.com Admits its Financial Statements Were Phony

Overstock CEO Patrick Byrne was too busy cyberstalking to comment

(Updated 10/4 evening)

It's official: Overstock.com is now the Overstock Stock Fraud.

The corporate crime petri dish put out an SEC filing this afternoon. after the market closed, announcing that its 2008 and 2009 financials will have to be restated.

What that means can be summed up very simply: all of its recent financial statements are lies. It also means that white collar crime-fighter Sam Antar, who has previously blogged on how Overstock has systematically falsified its financial statements--and was viciously attacked in return--was right in every detail.

The usually voluble CEO Patrick Byrne was believed to be in a bunker with Eva Braun.

As usual, Byrne acted like a kid waiting till the last moment before telling Mummy that he broke the bathroom window. The decision to make the restatements--something Byrne had previously, vehemently said was unecessary, to the point of firing his previous auditor--was made on Jan. 29. He waited until the expiration of the time period set by those pesky securities laws.

Sam has blogged voluminously on this issue, and justifiably gloats in this post tonight. Sam summarizes the case he had previously laid out for regulators, which is that Overstock manipulated its earnings by using a "cookie jar reserve."

Here's a chart from Sam describing just what the restatements mean--something Overstock deliberately concealed in its deliberately murky filing today:

Be sure to compare the top row of numbers with the bottom row. Note that a much-hyped fourth quarter "gain" was actually a loss.

One of my favorite war movies, Above and Beyond, about the bombing or Hiroshima, was playing on Turner Classic Movies at the time the 8-K was filed. But you didn't have to be watching TCM to see a mushroom cloud--the one rising over whatever credibility Overstock may have previously had. It also puts a fresh light on the disgusting activities of Byrne's employee Judd Bagley (right), a possible pederast, as he was eloquently termed by one his victims, who has cyberstalked the wives and kids of his critics and people in the media, on Facebook and elsewhere.

These people have behaved with all the class of kids in sixth grade who spy on the girls' bathroom, and there is now no possible doubt as to the reason: they were covering up for the cookie jar reserve that Patrick Byrne's instituted to manipulate his quarterly financials.

All the attacks on Antar, all the claims that its accounting was a product of "Mormon eagle scouts," have all turned out to be lies to divert attention from fraud.

The SEC is investigating Overstock.com. I hope that this investigation examines the whole range of wrongdoing by this rotten little company and the creeps who run it.

The voluble Byrne, meanwhile, was last found on a stock message board, doing his usual stalking shtick. He's bored and repelled anyone who's taken a close look at his reptillian self, but not to worry, I'll hang around until he is an odoriferous memory. I don't think that will be too long.

Barry Ritholtz summed up the situation well in a post tonight:

Their whole campaign against naked shorting, the bizarre cyberstalking — all of that junk has been nothing more than a grand case of misdirection to hide the fact that Overstock has been cooking their books for who knows how long.

Let’s look at what preceded their latest 8k filing with the SEC:

• Price Waterhouse Coopers was fired after 8 years of failed audits;

• Grant Thorton recommended restating financial reports to correct material misstatements; They were fired soon thereafter;

• Grant Thorton files letter with SEC stating material misstatements ont he part of Overstock (SEC)

• CFO resigned January 20th; (SEC)

• SEC begins examining Overstock’s financial reporting;

And where has that led us?

• In the most recent 8k, Overstock admits having to restate quarterly financials from Q1 2008 to Q3 2009;

. . . I suspect there will be more shoes to drop in the future. I also have a suspicion that a few execs and former employees will be getting fitted for state issued orange jumpsuits.